Text—Model Remainder Deed and Trust Instrument

The Model Remainder Deed and Trust Instrument is intended to focus the owner’s reasoning on the important issues, provide a place to begin and a pattern to follow in drafting the final document, and reduce dependence on counsel for original drafting. It may be used and adapted by anyone, and modified at will to suit individual circumstances. But it is only a model. It is not a substitute for individualized legal advice. No one should use a document of this kind without consulting with expert legal counsel licensed in the jurisdiction where the trust is to be established (usually but not always the state where the collection is held). A Foundation Legal Assistance Grant may be available to pay for this consultation.

NOTE: The footnotes are guides to drafting and do not form part of the Model Instrument.

To download the text only, without the website apparatus, please click Model Remainder Deed and Trust Instrument.

JOHN DOE COLLECTION REMAINDER TRUST

REMAINDER DEED AND TRUST INSTRUMENT

  1. My collection of books, pamphlets, journals, files, correspondence, papers, charts and other documents on flags and related subjects (“Collection”) is of significant scholarly value.1
  2. The Collection is defined to include not only materials held on the date of this Instrument, but similar materials added to it after that date, up to the time of my death (or acceleration under paragraph [number] below).
  3. I wish for the Collection to be preserved in a permanent non-profit institution, such as (but not limited to) a museum or university library, and made available to scholars in the future.
  4. To accomplish this intention, I, John Doe (“Grantor”) hereby create the JOHN DOE COLLECTION PRESERVATION REMAINDER TRUST (“Trust”).  The Trust is to be a [name State] trust, to operate and be construed according to the laws of the State of [specify].2
  5. I hereby divide my absolute ownership in the collection into two parts: a Life Estate, which is to continue until my death, and a Remainder, consisting of the succession to the Collection after the expiration of my life estate.3
  6. I hereby deed the Remainder to the Trust, to be held and disposed of as directed in this Instrument.  My intention in doing this is to withhold the Collection from the control of my heirs, but to preserve it for the Trustees to place in a permanent non-profit institution in accordance with my wishes.  The Trust is to come into force on the execution of a Declaration of Trust by at least one Trustee.
  7. The power to revoke or amend this trust and deed is absolute, but personal to the Grantor and may be executed by him only, to the exclusion of all others including Surrogates such as those defined in paragraph [number] below.  Revocation and amendment must be in writing, signed by the Grantor and delivered to a Trustee.4
  8. When on my death my Life Estate in the Collection expires, thus activating the Remainder, the Trustees of the Trust will automatically enter into possession of the Collection and own it outright, subject only to the provisions of this Instrument.
  9. Once in possession of the Collection, the Trustees will proceed promptly to identify a suitable receiving institution.  They are to consider the following factors in selecting an institution:
    1. size, longevity and permanence of the receiving institution’s library (for books and documents) or museum (for other artifacts);
    2. guarantees of retention of the contents of the collection, provided that duplicates may be deaccessioned;
    3. reasonable guarantees of physical preservation and conservation of the contents of the collection;
    4. guarantees of the continued integrity of individual elements of the collection, by which is meant not that all elements need be maintained in the same place, but that units of the collection (for example, the collected papers of a particular scholar) whose distinct structural coherence adds scholarly value to their contents be preserved intact;
    5. guarantees of free scholarly access to the collection, to include prompt unpacking, accessible storage, and timely cataloguing and inclusion in the institution’s master catalogue, so that the materials in the collection become available for use in a practical fashion within a reasonable time;
    6. additional guarantees, if available, of the active use of the collection, for example to complement curriculum, to support advanced studies, to be exhibited or published, etc.;
    7. acceptance without endowment;
    8. location of the receiving institution, institutions in the United States being preferred5; and
    9. such other factors as may seem suitable to the Trustees, having care to fulfill the wishes of the Grantor as far as they may be known.
    10. In selecting a receiving institution, the Trustees may give such relative weight to the various criteria in paragraph [number] as may seem best to them under the circumstances, provided that criteria b, c, d and e are considered vital and are not to be compromised.  I recognize, however, that no guarantee is absolute, and that the Trustees may accept guarantees judged by them to be given in good faith and to be reliable to a reasonable degree of certainty.  I intend that the business judgment rule apply to the actions of my Trustees on the same terms as if they were trustees of a business enterprise.
    11. Once the receiving institution has been identified, the Trustees will conclude the transfer as soon as is reasonably practicable.6  The transfer is to be irrevocable and free of charge7, provided that the institution will absorb all costs incidental to the transfer, and pre-transfer costs if the provision for them under paragraph [number] below is not made or is insufficient.  The institution receiving the collection will be considered the Beneficiary of the Trust.
    12. The Trustees may not transfer the Collection to a private individual, or to a for-profit institution.  Transfer must be to a non-profit institution qualifying for federal and state tax exemption, preferably an institution of high scholarly reputation.  Public or university libraries, or museums open to the public, are preferred.  Transfer even to a non-profit institution in existence for less than 25 years is disfavored, and may only take place in exceptional circumstances and only with the unanimous agreement of the Trustees.
    13. If they deem it expedient and consistent with the purposes of the Trust, the Trustees may place discrete parts of my collection in separate institutions.   Thus, for example, books and documentation on flags may go to one institution, and books and documentation on coins may go to another.  But materials on the same subject should not be placed in separate institutions.
    14. The Trustees will have the customary powers of trustees under the law of the State of [specify], but only in furtherance of the purpose of the Trust.  Thus for example their power to dispose of Trust property is limited to disposition in aid of that purpose.
    15. I declare my intention to leave the Trust the sum of $____ in my will, to cover pre-transfer costs including preparing an inventory, if necessary, expenses of search (including secretarial assistance, postage and the like), interim storage and transfer to place of storage, necessary travel if any incidental to negotiations for placement, etc.  Any funds remaining from this legacy after the Collection is received by the receiving institution are to be returned to my executor.  But if this legacy is not in fact found in my will, the purpose of the Trust and the duties of the Trustees will be unaffected, and they will seek reimbursement of pre-transfer costs from the receiving institution.  The Trustees are authorized to apply to the Flag Heritage Foundation, or elsewhere, for a Cataloguing Assistance Grant.8
    16. The Grantor may at any time accelerate the transfer by giving his remaining life estate to the Trust by a written deed of gift.  This gift will unify the interests comprising the ownership of the Collection, and the Trustees may then proceed to placement without waiting for the death of the Grantor, providing, if appropriate, that physical possession be retained by the Grantor until he dies, is incapacitated, or releases possession.
    17. If for reason of incompetence the affairs of the Grantor have become subject to management by an attorney-in-fact acting under a power of attorney, a conservator, or some other legally appointed surrogate (“Surrogate”), and his resumption of control is unlikely, the Surrogate may (but need not) exercise the acceleration clause.  In such an event the Surrogate may also advance the donation for expenses mentioned in paragraph [number] above; in which case the Trustees are directed to refuse the legacy for this purpose if it is actually made by the Grantor’s will.
    18. There shall be three initial Trustees: A____________ B____________, C____________ D____________ and E____________ F____________.  While the Grantor is alive and competent, he may remove Trustees, name additional Trustees, and fill vacancies, all in his complete discretion.
    19. After the Grantor dies, or becomes incompetent and subject to indefinite Surrogacy, or earlier if the Grantor shall so direct in writing, successor Trustees shall be appointed as follows.
      1. If any single named Trustee should be unable or unwilling to serve, the remaining two Trustees shall choose a replacement.
      2. If two Trustees are unable to agree on a replacement, they shall each name a person and those two persons shall agree on a replacement.
      3. Vacancies shall be filled in the same way, so that the Board of Trustees (“Board”) is self-perpetuating.
      4. If only one Trustee takes office, or if at some time after the Board is first constituted only one seat is occupied, that Trustee will appoint an additional Trustee and the Board of Trustees of the Flag Heritage Foundation of Winchester, Massachusetts, will name the other.
      5. If after the Board is first constituted all the seats on the Board shall be vacant at the same time, the Board of Trustees of the Flag Heritage Foundation shall name three new Trustees.
      6. My heirs at law or under my will shall be ineligible for appointment as Trustees.
      7. No bond shall be required of Trustees under this Instrument.
      8. Except where unanimity is required (as provided in paragraph [number] above for  placement in a non-profit institution in existence for less than 25 years), the agreement of two Trustees shall be necessary to transact Trust business, provided that if only one Trustee is in office he or she may appoint an additional Trustees as provided in paragraph [number] above, and provided that the first Trustee to take office will be competent to execute the Declaration of Trust..
      9. To supplement the definition of the Collection in paragraph [number] as including materials added after the creation of the Trust, I provide that the Grantor, his Surrogate, or the Trustees may make and accept additions to the Collection.  But only the Grantor himself may withdraw any item from the Collection.
      10. Once the Collection has passed to the receiving institution(s), and all outstanding accounts have been settled, the Trust shall terminate.
      11. If any portion of this Deed and Instrument is invalid, that provision shall be disregarded, and the rest given effect as if the invalid provision has not been included.

 

DONE by my hand on the _____day of __________, 20__, at ________________, _______________.

___________________________

[Name], Grantor

 

[TWO WITNESSES]

[NOTARIAL ATTESTATION, if required]

 

JOHN DOE COLLECTION REMAINDER TRUST

DECLARATION OF TRUST

  1. This Declaration of Trust “Declaration” is intended to give effect to the JOHN DOE COLLECTION REMAINDER TRUST (“Trust).  A true copy of the  Remainder Deed and Trust Instrument (“Instrument”) establishing the Trust is attached hereto and incorporated by reference.
  2. Acting under paragraph [number] of the Instrument, authorizing the first Trustee of the Trust to take office to execute the Declaration of Trust, I, A________ B_______, hereby declare that I am the first Trustee to take office, accept on behalf of the Trust the Remainder of the Collection as defined in the Instrument, receive the same, and declare that it is held in trust for the purposes declared therein by the Grantor, effective on the date of execution.
  3. I certify that I have read the foregoing Deed, Instrument and Declaration, approve them, and agree to be bound by them.

 

DONE by my hand on the _____day of __________, 20__, at ________________, _______________.

___________________________

[Name], Trustee

[NOTARIAL ATTESTATION]

 

ACCEPTANCE BY SETTLOR

I, JOHN DOE, Settlor of the JOHN DOE COLLECTION REMAINDER TRUST, declare that I have read the above Declaration with incorporated material, that it correctly states the terms under which the trust estate is to be held and disposed of, and that I agree to be bound thereby.

 

DONE by my hand on the _____day of __________, 20__, at ________________, _______________.

___________________________

[Name], Grantor

[NOTARIAL ATTESTATION]

 

  1. If the collection includes other items, or if sub-collections (such as coin books) are to be separated out, adapt or expand this paragraph accordingly.
  2. This should ordinarily be the state where the Instrument is executed and where the library which is he subject of the trust is located.
  3. If ownership of the collection is not absolute – if, for example it is subject to a community property interest – this provision will have to be modified, and some additional provision (such as a parallel transfer by the spouse of his or her interest into the same trust) may have to be made.
  4. Note that the only way to get a tax benefit from this transfer is to give it irrevocably.  The Grantor will have to decide whether he prefers the tax benefit or the flexibility of being able to revoke the Trust and make a different disposition of the Collection.  The easiest path to the tax benefit would be negotiate a placement of the Remainder with the receiving institution directly (in which case the Trust would be wholly unnecessary), or failing that to deed the Remainder irrevocably to the Flag Heritage Foundation to place under its Collection Preservation Escrow Program.  As the Foundation is a registered tax-exempt charity, this would qualify the gift as tax-deductible.
  5. Or somewhere else, or institutions in a particular state or city being preferred, or the Grantor’s own college being preferred, or whatever preference if any the Grantor cares to express.  All such preferences are best avoided as they restrict the Trustees’ freedom of action.
  6. There may be tax problems if the collection passes to trustees who do not transfer it to a tax-exempt entity within a reasonable time, say a year or at least by the time the estate tax return is due to be filed.  In such a case the trustees and the donor should discuss a provision passing title to the collection to the Flag Heritage Foundation under its Collection Preservation Escrow Program, for the Foundation to place if the estate would be large enough that estate tax would be a problem, and if the trustees themselves cannot place it in time.
  7. Or not, if the Grantor prefers otherwise, bearing in mind that if the Collection must be sold rather than given, it will be harder to place, and also that the Trustees must then be instructed how to dispose of the proceeds.  The provision making the receiving institution the Beneficiary of the Trust would need to be altered in this situation.
  8. This paragraph may also provide for an honorarium in a set amount, to be paid from this legacy to the Trustees in office at the completion of the transfer to the receiving institution.  Or the Grantor could require that the Trustees serve without compensation.